South Korea: E-commerce CEO facing allegations of shilling LUNA tokens

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Prosecutors in South Korea are going hard after Terra’s promoters several months after the project’s collapse. The latest in a string of moves against the project’s affiliates is the application of an arrest warrant against a former CEO of e-commerce giant Tmon for promoting LUNA tokens.

Officials from the Seoul Southern District Prosecutor’s Office are moving against the former chief, identified as Mr. A, for allegedly promoting LUNA and the Terra ecosystem as a payment method. An arrest warrant has since been filed against Mr. A, with the final decision to be made this week.

The prosecutors suspected that Mr. A was approached by Terra’s co-founder Shin Hyun-seung, or Daniel Shin, at that time to market and advertise Terra as a simple payment method for the industry. In exchange for his promotion, Mr. A was reportedly paid in LUNA tokens worth billions of Korean won which he sold for a massive profit of around $700,000.

Investigators claim that the barrage of articles and promotional material from Tmon’s ex-CEO made South Koreans perceive digital currencies like LUNA tokens as safe assets. Furthermore, there is the assertion that his efforts led to the rise of token prices, contributing to the grave losses suffered by investors.

In 2018, authorities wrote to Shin that “it was impossible to conduct a payment business with cryptocurrency,” but he proceeded with promotional activities despite multiple warnings. Investigators cite a lecture given by Shin at the Upbit Developer Conference where the embattled co-founder told attendees that the Terra would be an alternative to credit cards.

Investigations are currently underway to uncover evidence of collusion amongst South Korea’s financial institutions over Terra’s implosion. Prosecutors have previously sought arrest warrants against Shin and seven other early investors in the Terra project.

Seeking a scapegoat after nearly a year

Nearly 12 months since stablecoin TerraUSD (UST) lost its peg to the U.S. dollar, lighting the fuse for Terra’s implosion, South Korean authorities are desperate to secure a conviction. Multiple raids have been carried out in the homes and offices of the project’s top dogs amid a global manhunt for Do Kwon, the project’s founder.

Last week, South Korean officials flew to Serbia to fast-track the arrest of Do Kwon, who is rumored to be hiding in the Balkan nation. Prior to this, prosecutors froze assets worth $105 million from Shin over unfair profits on the sale of LUNA tokens.

“Reports that CEO Shin Hyun-seung sold LUNA at a high point and realized profits or that he made profits through other illegal methods are not true,” said Shin’s attorney.

The U.S. Securities and Exchange Commission (SEC) also plans to formally pursue charges against Do Kwon and Terraform Labs over Terra USD, LUNA, and MIR security token, which the regulator said constitute “a multi-billion dollar crypto asset securities fraud.”

Watch: Law & Order: Regulatory Compliance for Blockchain & Digital Assets